T
HE
A
MERICAN
R
ECOVERY AND
R
EINVESTMENT
A
CT OF
2009
–
F
EBRUARY
12,
2009
FULL SUMMARY OF PROVISIONS FROM SENATE FINANCE
,
HOUSE WAYS
&
MEANS COMMITTEES
2
Increase Eligibility for the Refundable Portion of Child Credit.
The bill would increase theeligibility for the refundable child tax credit in 2009 and 2010. For 2008, the child tax credit is
refundable to the extent of 15 percent of the taxpayer’s earned i
ncome in excess of $8,500. Thebill would reduce this floor for 2009 and 2010 to $3,000.
This proposal is estimated to cost $14.830 billion over 10 years.
“American Opportunity” Education Tax C
redit.
The bill would provide financial assistancefor individuals seeking a college education. For 2009 and 2010, the bill would provide taxpayers
with a new “American Opportunity” tax credit of up to $2,500 of the cost of tuition and related
expenses paid during the taxable year. Under this new tax credit, taxpayers will receive a taxcredit based on one hundred percent (100%) of the first $2,000 of tuition and related expenses(including books) paid during the taxable year and twenty-five percent (25%) of the next $2,000of tuition and related expenses paid during the taxable year. Forty percent (40%) of the creditwould be refundable. This tax credit will be subject to a phase-out for taxpayers with adjustedgross income in excess of $80,000 ($160,000 for married couples filing jointly).
This proposal isestimated to cost $13.907 billion over 10 years.
Computers as Qualified Education Expenses in 529 Education Plans.
Section 529 EducationPlans are tax-advantaged savings plans that cover all qualified education expenses, including:tuition, room & board, mandatory fees and books. The bill provides that computers andcomputer technology qualify as qualified education expenses.
This proposal is estimated to cost $6 million
over 10 years.
Refundable First-time Home Buyer Credit.
Last year, Congress provided taxpayers with arefundable tax credit that was equivalent to an interest-free loan equal to 10 percent of thepurchase of a home (up to $7,500) by first-time home buyers. The provision applies to homespurchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax creditare currently required to repay any amount received under this provision back to the governmentover 15 years in equal installments, or, if earlier, when the home is sold. The credit phases outfor taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a jointreturn). The bill eliminates the repayment obligation for taxpayers that purchase homes afterJanuary 1, 2009, increases the maximum value of the credit to $8,000, and removes theprohibition on financing by mortgage revenue bonds, and extends the availability of the creditfor homes purchased before December 1, 2009. The provision would retain the credit recaptureif the house is sold within three years of purchase.
This proposal is estimated to cost $6.638billion over 10 years.
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